Unemployment is unacceptably high, but voters grasp that the U.S. is not recovering from a normal recession, but from the worst crisis since the Depression
The postelection news cycle is still dwelling on the mystery: How did Barack Obama become the first president since the Great Depression to win a second term with unemployment as high as 8%? Even before the vote, the economic metrics that prognosticators such as Yale's Ray Fair use to forecast election results pointed to a defeat for Obama, given persistently weak growth in per capita income over his first four years. The polls showing that most voters saw the economy as the key issue only added to the mystery of how Obama beat the odds. The answer may be that, in their gut, voters understand that the United States is not recovering from a normal recession, but from the worst crisis since the Depression, and therefore they chose to give Obama four more years, just as they did for Franklin Delano Roosevelt in 1936.
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The American economy has in fact not performed badly in terms of GDP growth over the last four years, not when compared to its own previous track record in severe crises, or to other countries. The forecaster who expected an Obama defeat focused on how the debt problem is undermining US growth, which has fallen from a long-term rate of 3.4% in the decades before 2007 to just 2% this year, and is running slower than during the recovery phase of most postwar recessions. U.S. economic output is now 10% below its trend line before the crisis and still falling, which is the real reason for high unemployment. This case for the historically "weak recovery" was the essence of the case against Obama's handling of the economy.
Voters seemed to choose, intuitively if not deliberately, the historical and global perspective of Harvard economists Kenneth Rogoff and Carmen Reinhardt, who argue that the relevant point of comparison is not the dozen or so recessions the United States has seen since World War II, but the very different case of systemic financial crises (pdf). These are more traumatic and rare, and by this standard, the United States is recovering lost per capita output faster than it did following previous systemic crises, from the meltdown of 1873 through the Depression, and also faster than most of the Eurozone nations following the systemic crisis of 2008.
Many studies show that people feel most content when they are prospering relative to their neighbors, and America is doing relatively well even compared to emerging nations in earlier debt crises. A recent update on Rogoff and Reinhardt's work shows that, compared to 20 major international banking crises from Norway in 1899 through Thailand in 1997, the recent drop in US home prices, stock market values, employment, and real GDP are all below the historic average. (See Figure 1 below from the updated report) It also shows that the spike in US public debt was below the historic norm through the end of 2011, but this is the point where voter patience may turn faster than Obama would like.